Republican talks break down, fiscal cliff looms

Washington: House Speaker John Boehner threw efforts to avoid the year-end "fiscal cliff" into chaos late Thursday, as he abruptly shuttered the House for the holidays after failing to win support from his fellow Republicans for a plan to let tax rates rise for millionaires.

The proposal - Mr Boehner's alternative to negotiating a broader package with President Barack Obama - would have protected the vast majority of Americans from significant tax increases set to take effect next year. But because it also would have permitted tax rates to rise for about 400,000 families, conservatives balked, leaving Mr Boehner, R-Ohio, humiliated and his negotiating power immeasurably weakened.

No one could say late Thursday what will happen next. Just 11 days remain until the new year, when more than $US 500 billion in automatic tax increases and spending cuts will begin to take effect, threatening to undermine the sluggish recovery and prompt a new recession.

As a grim-faced Mr Boehner hurried from the Capitol on Thursday evening, his office issued a statement abdicating responsibility for solving the crisis to Mr Obama and the Democratic-controlled Senate.

"The House did not take up the tax measure today because it did not have sufficient support from our members to pass. Now it is up to the president to work with Reid on legislation to avert the fiscal cliff," the statement said, referring to Senate Majority Leader Harry Reid, D-Nevada.

White House press secretary Jay Carney vowed that Obama would act but offered no clear path through the political mine field. The House is now out of session until after Christmas. The Senate is scheduled to meet for only a few hours on Friday afternoon before members leave town until next Thursday.

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"The president's main priority is to ensure that taxes don't go up on 98 percent of Americans and 97 percent of small businesses in just a few short days," Mr Carney said in a written statement. "The President will work with Congress to get this done and we are hopeful that we will be able to find a bipartisan solution quickly that protects the middle class and our economy."

Senior Democrats, meanwhile, urged Mr Boehner to stop wooing his hard-liners and resume negotiations with the White House over a debt-reduction compromise that could win the support of Democrats and Republicans.

"Speaker Boehner's partisan approach wasted an entire week and pushed middle-class families closer to the edge," Reid spokesman Adam Jentleson said in a statement. "The only way to avoid the cliff altogether is for Speaker Boehner to return to negotiations, and work with President Obama and the Senate to forge a bipartisan deal."

Even if the resumption of talks were to yield a breakthrough, Mr Boehner's ability to deliver GOP votes for any proposal that raises taxes is now in doubt after he was unable to rally House Republicans behind what he had dubbed "Plan B."

Emboldened liberals quickly argued that Democrats should demand additional concessions from Republicans, either upping the demand for fresh tax revenue or withdrawing Obama's offer to seek savings through cuts in federal health and retirement programs.

The vote on Plan B was perhaps the most consequential test of Mr Boehner's leadership since he took control of the House early last year.